NEW YORK - Microsoft Corp. directors seeking a new chief executive officer to reinvigorate the software maker should be mindful of the lesson of J.C. Penney Co., said Steve Miller, who has spent his career helping hobbled companies survive.
“What must terrify them is the example, say, of J.C. Penney,” said Miller, the chairman of American International Group Inc. “They decided they needed to change, they brought in Ron Johnson, did a radical shift in their whole strategy, and it was a complete failure.”
J.C. Penney hired Johnson from Apple, where he turned the iPad maker’s stores into a lucrative retail empire. At J.C. Penney, Johnson scaled back discounts and sought to transform the department store chain into collections of boutiques. The company replaced Johnson with former CEO Mike Ullman inApril.
Microsoft, the largest software maker, has been considering outsiders for the CEO post. Its list of candidates has included Ford CEO Alan Mulally and Qualcomm Chief Operating Officer Steve Mollenkopf, people familiar with the matter said. Mollenkopf was removed from the running Friday when Qualcomm named him CEO.
Microsoft is replacing Steve Ballmer who took over as CEO in 2000 from Bill Gates.
“Only two people ever led this company, and they’re both sitting on the board of directors,” Miller said. “The new person coming in is going to have a big challenge. Just, if they’re going to change the direction at all,it’s probably going to be contentious within that boardroom.”
Miller became American International Group chairman in 2010 and worked with CEO Robert Benmosche to help repay the insurer’s U.S.bailout. He previously oversaw the bankruptcy of auto parts supplier Delphi Corp. and helped Chrysler Corp. return to profitability after taking government loans in 1980.
He has been a director since the 1990s at Symantec Corp., the maker of security software that was led for a decade by John Thompson, 64, the Microsoft director who is leading the search committee to replace Ballmer.
“I think the best candidate for that position is John Thompson himself, because of what I saw him do at Symantec,” Miller said.
Microsoft is going through its biggest transition in decades, seeking a new leader while it adopts a new corporate structure focused on devices and services. The Redmond, Wash.-based company also is buying Nokia’s handset unit as it adapts to a technology landscape where consumers and businesses favor mobile devices and Web delivered software.
“Microsoft has a tremendous platform, but the technology business changes so fast, and companies that two years ago were great are all of the sudden on the skids. And if you don’t get ahead of that curve, you know, you could see Microsoft going down fast.” Information for this article was contributed by Dina Bass, Noah Buhayar and Zachary Tracer of Bloomberg News.
Business, Pages 30 on 12/14/2013